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Journal of Revenue and Pricing Management

, Volume 12, Issue 3, pp 271–285 | Cite as

Dynamic pricing for hotel revenue management using price multipliers

  • Abd El-Moniem Bayoumi
  • Mohamed Saleh
  • Amir F Atiya
  • Heba Abdel Aziz
Research Article

Abstract

In this article we propose a new dynamic pricing approach for the hotel revenue management problem. The proposed approach is based on having ‘price multipliers’ that vary around ‘1’ and provide a varying discount/premium over some seasonal reference price. The price multipliers are a function of certain influencing variables (for example, hotel occupancy, time until arrival). We apply an optimization algorithm for determining the parameters of these multipliers, the goal being to maximize the revenue, taking into account current demand, and the demand-price sensitivity of the hotel's guest. The optimization algorithm makes use of a Monte Carlo simulator that simulates all the hotel's processes, such as reservations arrivals, cancellations, duration of stay, no shows, group reservations, seasonality and trend, as faithfully as possible. We have tested the proposed approach by successfully applying it to the revenue management problem of Plaza Hotel, Alexandria, Egypt, as a case study.

Keywords

revenue management system dynamic pricing price elasticity Monte Carlo simulation hotel room forecasting 

Notes

Acknowledgements

We acknowledge Professor Hanan Kattara of Alexandria University (and the owner of Plaza Hotel) for her generous help and willingness to supply all Plaza Hotel's data. We also thank Emad Mourad, the manager of Plaza Hotel, for his assistance.

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Copyright information

© Palgrave Macmillan, a division of Macmillan Publishers Ltd 2012

Authors and Affiliations

  • Abd El-Moniem Bayoumi
    • 1
  • Mohamed Saleh
    • 2
  • Amir F Atiya
    • 1
  • Heba Abdel Aziz
    • 2
  1. 1.Department of Computer EngineeringCairo UniversityGizaEgypt
  2. 2.Faculty of Computers and Information, Cairo UniversityGizaEgypt

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